Saudi Arabia Tourism Report Q1 2012

Saudi Arabia’s tourism industry is unique in that despite the limitations of strict entrance visa regulations, the industry has strong growth potential. That said, uncertainty across the region as its political landscape changes may heighten security risks and place downward pressure on Saudi Arabia’s tourism arrivals.
Demonstrations have occurred in the country, with protesters calling for political reform, despite the fact that the demonstrations are illegal. We hold to our growth forecast for the country but stress that continued unrest may cause tourists to give the entire region a wide berth. Tourist arrivals to the country grew by 5% year-on-year (y-o-y) to 12.91mn in 2010, after remaining constant in 2009 at just over 12mn.
We forecast the number of tourist arrivals to grow by an average of 6% y-o-y through to the end of our forecast period in 2015. One of the main drivers for the tourism industry is religious tourism. Saudi Arabia is home to two of Islam’s holiest cities, Mecca and Medina, and every year millions of Muslims go to Mecca for the Hajj, the largest annual pilgrimage in the world. Business travel is also a growing area, given Saudi Arabia’s status as the world’s largest oil exporter and its other large industries such as defence.
The hospitality sector looks set to grow in tandem with tourist arrivals. BMI forecasts that there will be 393,000 hotel rooms in Saudi Arabia by 2015, up from an estimated 289,000 in 2011. In 2009, a number of international chains opened their first hotels in the market, including Rotana, Hyatt Hotels & Resorts, Accor and Raffles Hotels & Resorts. Those already present in the market are expanding, with InterContinental Hotels Group (IHG), al-Hokair Group, Starwood Hotels & Resorts, Rezidor Hotel Group and Wyndham Hotel Group opening new hotels in 2010 and 2011.
The Saudi authorities have said they want to diversify away from dependence on oil, with the tourism industry one of the focal points. Government expenditure has focused on developing the religious tourism and business travel sectors in particular, and for this reason we forecast an increase in collective government expenditure (expenditure that cannot be assigned to a particular group of tourists) and individual government expenditure (which refers to investment in services with an identifiable individual customer) over the forecast period.
The government is also keen to develop its domestic tourism market in an effort to capture some of the capital spent by the millions of Saudi citizens that travel abroad each year. Saudi tourists mainly travel to other countries in the Middle East. Despite efforts to encourage more Saudis to holiday at home, we forecast the number of citizens travelling abroad will increase from an estimated 9.96mn in 2011 to 12.73mn in 2015. International tourism expenditure is also forecast to increase, surpassing US$10bn by the end of the forecast period.
Saudi Arabia has been boosting its international presence and tourism marketing. In January 2011, the Saudi Commission for Tourism and Antiquities set up pages and accounts on tourism in the country on a number of social networking sites, including Facebook, Twitter and YouTube. In 2010, the tourism board hosted 18 festivals targeting all age groups. The festivals were held throughout the country and included sports events, entertainment and Saudi culture and heritage. Four new provincial museums, in Bahah, Tabuk, Hail and Dammam, are scheduled to be established by the end of 2012, while the tourism authorities have also licensed 40 private museums to be established using the new technology to showcase Saudi Arabia’s heritage and antiquities. Internationally, Saudi Arabia’s pavilion at the Shanghai World Expo 2010, which ran from May to October, attracted more than 30,000 people a day. The Saudi pavilion was the largest after China’s. To further cement the country’s global tourism footprint, the travel publisher Lonely Planet intends to release a separate guide on tourist spots in Saudi Arabia. It has previously been included in the Oman, UAE and Arabian Peninsula guide.

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Executive Summary . 5
SWOT Analysis 7
Saudi Arabia Tourism SWOT .. 7
Saudi Arabia Political SWOT . 7
Saudi Arabia Economic SWOT .. 8
Saudi Arabia Business Environment SWOT . 8
Industry Forecast Scenario .. 9
Arrivals . 9
Table: Arrivals, 2007-2015 .. 9
Accommodation . 11
Table: Hotels Data, 2007-2015 (‘000, unless stated) 11
Expenditure .. 12
Table: Tourist Expenditure And Economic Impact, 2007-2015 12
Inbound Tourism 13
Table: Inbound Tourism, 2007-2015 14
Outbound Tourism 15
Table: Outbound Tourism, 2007-2015 . 15
Market Overview – Travel 17
Air Travel .. 17
Rail Travel 18
Road Travel . 20
Global Oil Products Price Outlook .. 20
Market Overview – Hospitality . 24
Hotels .. 24
Business Environment Outlook .. 26
Table: Middle East And Africa Travel And Tourism Business Environment Ratings . 26
BMI’s Security Ratings .. 26
Table: Middle East And Africa Defence And Security Ratings . 27
Table: Middle East And North Africa State Vulnerability To Terrorism Index . 28
Middle East And Africa Security Overview .. 28
Global Assumptions . 31
Europe On The Edge 31
Table: Global Assumptions, 2009-2015 .. 32
Table: Global And Regional Real GDP Growth, 2010-2013 (% chg y-o-y) 33
Table: Developed Market Exchange Rates, 2010-2013 .. 33
Table: Emerging Market Exchange Rates, 2010-2013 . 34
Developed States 34
Table: Developed States Real GDP Growth Forecasts, 2010-2013 (% chg y-o-y) . 35
Emerging Markets. 36
Table: Emerging Markets Real GDP Growth Forecasts, 2010-2013 (% chg y-o-y) .. 37
Table: Real GDP Growth Consensus Forecasts, 2011-2012 (%chg y-o-y) . 38
Company Profiles 39
Elaf Group . 39
Nas Air . 39
Sama . 40
Saudi Arabian Airlines . 40
Saudi BinLadin Group . 40
BMI Methodology 41
How We Generate Our Industry Forecasts .. 41
Tourism Industry . 41
Sources 42
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